Last updated: October 2026

Payroll companies for restaurants: what to require in 2026

The wrong payroll company costs a restaurant owner more than the monthly fee. It costs them the Section 45B FICA tip credit they never claimed, the Form 8027 filing they did not know was due, and the service charge misclassification that built up a tax liability for two years. The best payroll for restaurants is not the cheapest. It is the one that actually handles restaurant payroll correctly.

What restaurant payroll requires that normal payroll does not

Every restaurant payroll provider must handle five things that standard small business payroll does not touch. If a provider cannot do all five, it is not built for hospitality payroll.

Tip tracking and reporting. The provider must accept reported tip amounts from employees (either through POS integration or manual entry), include those tips as wages for FICA withholding, and track them separately for Form 8027 and Section 45B calculations.

Tip credit calculation. In states that allow it, employers can pay tipped employees a cash wage below the standard minimum wage, with tips making up the difference. The federal tipped minimum wage is $2.13 per hour. The provider must calculate and verify that each tipped employee's cash wage plus reported tips meets or exceeds the applicable minimum wage for every pay period. If tips fall short, the employer owes the difference. A provider that does not flag shortfalls leaves you exposed to wage theft claims.

FICA tip credit tracking. The Section 45B credit covers the employer share of FICA paid on tips above the federal minimum wage in effect on January 1, 2007. The payroll provider must track the data. Your CPA claims the credit on your business return using Form 8846, but without accurate payroll data broken out by employee, the credit is impossible to calculate.

Service charge vs tip distinction. Automatic gratuities and service charges are wages, not tips, under IRS rules. They require income tax withholding and full FICA. The payroll system must allow you to code service charge income separately from reported tips. A system that lumps them together creates a compliance problem that compounds every pay period.

Form 8027 preparation. Restaurants that employ more than 10 workers on a typical day must file Form 8027 annually, reporting gross receipts, charged tips, and reported tips. If reported tips fall below 8% of receipts, the employer must allocate the shortfall among tipped employees. The payroll provider should either generate this form directly or provide a report that gives your accountant the exact data needed to complete it.

How the major providers handle restaurant payroll

Gusto

Gusto's FAQ states that Gusto can automatically adjust wages to comply with the FLSA tip credit and minimum wage requirement. Gusto also supplies a year-end report with the details your accountant needs for Section 45B.

Gusto does not charge for off-cycle payroll runs.

OnPay

OnPay's restaurant page states that it handles tips as a separate pay item and has a built-in tip makeup feature that automates the calculation when a worker's wages and tips fall short of minimum wage. Its pricing FAQ states that pricing includes unlimited pay runs, so running payroll two or four times a month costs the same. The rate is published: one monthly fee plus a per-employee fee. Optional HR add-ons are priced separately.

OnPay also lists Form 8846 among the tax filings and payments it automates.

The features that actually matter for restaurant payroll management

POS integration. If your payroll provider pulls tip data directly from your POS, you eliminate the most error-prone step in restaurant payroll. Manual tip entry invites mistakes that cascade into incorrect withholding, incorrect 8027 data, and incorrect Section 45B calculations.

Off-cycle run pricing. High turnover means frequent termination runs. Tip corrections mean adjustment runs. If your provider charges per off-cycle run, multiply that by your runs per year and add it to your annual cost.

Workers comp integration. Pay as you go workers comp through payroll integration is the cleanest setup for restaurants with variable staffing levels.

What to do before switching providers

Pull your last three years of payroll data and check whether your current provider tracked Section 45B FICA tip credit data. If the data exists but your CPA never claimed the credit, file amended returns.

Ask every provider on your shortlist the same five questions: Do you track tip credit compliance automatically? Do you generate Section 45B data for my CPA? Do you support Form 8027 filing or reporting? Do you distinguish service charges from tips in your system? What do you charge for off-cycle payroll runs? Any provider that cannot answer all five clearly is not ready for restaurant payroll taxes.

If you are evaluating a switch, request a parallel run. Compare the outputs line by line: tip credit calculations, FICA on tips, withholding amounts, employer tax totals. If the numbers do not match, find out why before committing.

This is not legal or financial advice. Consult a qualified professional for your specific situation.